Marc Roberts
Board Member of the European FinTech Association (EFA), on behalf of Raisin
Brigit Caroll
Board Member of the European FinTech Association (EFA), on behalf of Wise
Over the past 10 years, innovative fintech solutions have transformed the way consumers manage their money, ushering in new, convenient, affordable and more transparent services to consumers globally.
As the home to several global fintech companies, Europe has set out to harness the power of financial technology with its Digital Finance Strategy. But today, it is time for the EU to harmonise and update policies that act as barriers to fintech growth.
Remove digital-only barriers
Financial rules that were written ten or even five years ago don’t reflect the new reality that nearly all financial services are now digital. This means digital-only providers face hurdles that traditional providers do not. The EU should take concrete action to remove these barriers and mainstream policies that enable digital services across Europe.
Fintechs still face barriers when serving consumers across the EU. Examples of operational barriers span from duplicative anti-money laundering requirements, to diverging Know Your Customer rules, IBAN discrimination and patchwork consumer protection rules (e.g. different rules for digitally displaying financial products).
Open Banking’s success has also been fettered by diverging standards across EU countries. A single, harmonised EU rulebook is the best way to make Europe competitive on the global stage and ensure consumers benefit.
A single, harmonised EU rulebook is the best way to make Europe competitive on the global stage and ensure consumers benefit.
Same activity, same risk, same rules
The EU can lead the charge in rebuilding financial services. However, regulators can’t take a one-size-fits-all approach. The principle of same activity, same risk, same rules should apply. It’s crucial that risk assessments are made based on what risks fintech products actually present – rather than pulling them under existing regimes that may be proportionate for some, but not all.
Applying a cookie-cutter approach to regulation will generate barriers to entry and create companies based on an identical model when consumers benefit from diversity in products and services. The EU’s regulatory approach should acknowledge this variation and respond in a robust, proportionate manner.
The EU has the right goal in sight with its Digital Finance Strategy. Now it needs to take bold policy actions to make Europe the heart of digital finance – only then will its 450 million consumers reap the benefits.